Predatory pricing (AS/A LEVELS/IB/IAL)

Predatory pricing (AS/A LEVELS/IB/IAL)

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Predatory pricing

  • This pricing strategy involves cutting prices below the average cost of production in the short run.
  • Firms that are already in the market will struggle to compete with these extremely low prices and exit the market.
  • The firm that used predatory pricing will then increase its prices in the long run to maximise profits. They are able to do this because of the reduced competition.
  • Predatory pricing is also illegal in UK.


Tushar Depala

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